Arbitrate with Caution – Avoiding the Unauthorized Practice of Law

As technology continues to progress and enable companies and individual clients to do business in multiple jurisdictions, the prevalence of the multijurisdictional practice of law (MJP) is increasing for attorneys and law firms. With this opportunity comes risk, however, as attorneys must be cognizant of the ethical obligations entwined in the MJP, and in particular, the unauthorized practice of law. While intentionally non-judicial and at times less formal, private arbitration is an area where an MJP practitioner may not expect to confront these issues, but the potential repercussions mandates caution be taken.

Every jurisdiction prohibits the unauthorized practice of law and has its own rules, procedures, and case law defining what “practicing law” actually is. In an attempt to prescribe a baseline standard, ABA Model Rule 5.5 provides that a lawyer may represent a client in a jurisdiction in which he is not licensed to practice if the legal services are in or reasonably related to a pending or potential arbitration, mediation, or other alternative resolution proceeding in this or another jurisdiction, if the services are reasonably related to the lawyer's practice in a jurisdiction in which the lawyer is admitted to practice and are not services for which the forum requires pro hac vice admission. While the ABA Model Rules would seem to mostly exempt arbitration from what is deemed the unauthorized practice of law, states have not uniformly adopted the rule. The result is varying inconsistency, especially with arbitration.

A MJP practitioner who accepts representation of a client in arbitration must become familiar with the ethical rules in the jurisdiction where the arbitration is to take place. Several states either have specific requirements for undertaking an arbitration proceeding, or unfortunately, offer little to no guidance to the MJP practitioner. In the states that do have their own rules, many require that a verified statement, petition, or pro hac vice application be submitted to the state’s highest court or governing body, along with a filing fee, in advance of rendering any legal services in connection with an arbitration. The MJP practitioner should also be aware that certain states have numerical limits of the number of appearances an unlicensed attorney may undertake within a certain period. If preapproval is required prior to arbitrating in such a jurisdiction, the arbitration proceeding would likely count towards whether the MJP practitioner is engaging in a general, and therefore unlicensed, practice of law in that state.

It is imperative for attorneys to research these applicable rules and confirm compliance prior to commencing any matter or providing legal services. Engaging in the unauthorized practice of law can have drastic consequences including the potential for disciplinary action, forfeiture of attorneys’ fees, contempt of court, sanctions, injunctive relief, and even criminal charges. Some states even provide for a civil cause of action for victims of the unlicensed practice of law.

Though outside the formal confines of a courtroom, MJP practitioners must keep these ethical and professionalism considerations at the forefront prior to accepting a matter and rendering services in jurisdictions where they are not licensed. Any doubt as to these mandatory prerequisites should be confirmed with the applicable state bar’s ethics board or a local attorney. With stakes this high, ignorance is never bliss.